P N Gadgil Jewellers IPO Review | CA Rachana Ranade

Summary

CA Rachana Ranade discusses the IPO of P N Gadgil Jewellers, a Pune-based company with a rich history dating back to 1832. The video covers the company's operations, financials, and risks, highlighting its focus on the jewelry business with a significant presence in Maharashtra. Rachana also touches on the IPO details, including the issue size, funds allocation for new stores, and repayment of borrowings, providing a comprehensive analysis for potential investors.

Takeaways

• 🏢 P.N. Gadgil Jewellers is a Pune-based company with a rich heritage dating back to 1832, starting in Sangli and moving to Pune in 1958.
• 📈 The company operates primarily in the jewelry business, dealing in gold, silver, platinum, and diamond jewelry, with a significant presence in organized retail.
• 🌐 Geographically, P.N. Gadgil's business is highly concentrated in India, particularly in Maharashtra, where it ranks as the second-largest organized jeweler by store count.
• 📊 The jewelry retail segment in India has seen significant growth, with the organized retail jewelry share increasing from 0% in 1994 to 27-37% from 2016 to the present.
• 💎 Gold is the primary revenue driver for P.N. Gadgil, accounting for 92% of their revenue, followed by silver and platinum.
• 📉 The company focuses on managing inventory efficiently, aiming for lower inventory days which is beneficial for faster turnover and increased profitability.
• 📊 P.N. Gadgil has experienced growth in footfall and average transaction value, indicating a healthy customer base and sales performance.
• ⚠️ Key risks include concentration risk in Maharashtra and Pune, theft risk, and the potential impact of insurance claims on premiums and recoveries.
• 💼 The company has faced litigations, with claims amounting to approximately 11.5% of their profit after tax as of FY24.
• 📊 Financially, P.N. Gadgil has shown strong growth with a CAGR of 54.6% in revenue from operations, 39.8% in EBITDA, and 49% in PAT, indicating a robust financial performance.
• 💼 The IPO aims to raise 1,100 Cr, with 850 Cr for fresh issue and 250 Cr for offer for sale, which will be used for opening new stores and repaying loans, potentially improving financials.

Q & A

What is the historical background of P N Gadgil Jewellers?

P N Gadgil Jewellers has a legacy of almost six generations in the jewelry business, starting back in 1832 in Sangli. In 1958, Anant Gadgil, Vishwanath Gadgil, and Laxman Gadgil moved their business to Pune, opening their first store on Lakshmi Road.

What is the primary business of P N Gadgil Jewellers?

The primary business of P N Gadgil Jewellers is the sale of gold, silver, platinum, and diamond-related jewelry.

What is the flagship brand of P N Gadgil Jewellers?

The flagship brand of P N Gadgil Jewellers is 'PNG'.

How does P N Gadgil Jewellers sell its products?

P N Gadgil Jewellers sells its products through 39 retail stores and an online marketplace via their website.

What is the market share of organized jewelry retail in India, and how does it affect P N Gadgil Jewellers?

The market share of organized jewelry retail in India has increased from 0% in 1994 to almost 27 to 37% from 2016 to the present. This growth benefits P N Gadgil Jewellers, as they are part of the organized retail space.

What is the geographical concentration of P N Gadgil Jewellers' business?

P N Gadgil Jewellers' business is highly concentrated in India, with 94% of their stores located in Maharashtra, and a significant portion of their revenue coming from Pune.

How does the revenue break down for P N Gadgil Jewellers by product segment?

92% of the revenue comes from gold, roughly 3.5% from silver, and less than 1% from platinum.

What is the significance of inventory days in the jewelry business, and how does P N Gadgil Jewellers perform in this aspect?

Inventory days indicate how quickly a company can sell its specific jewelry. Lower inventory days are better as it allows for quicker turnover and increased profitability. P N Gadgil Jewellers has an inventory turnover of almost five to six times, which is considered good.

What are the key risks associated with P N Gadgil Jewellers' business?

Key risks include concentration risk in Pune and Maharashtra, theft risk, and the potential for increased insurance premiums or inability to recover full amounts from insurance in case of theft.

How has P N Gadgil Jewellers performed financially in recent years?

Revenue from operations has increased at a CAGR of almost 54.6%, EBITDA at a rate of almost 39.8%, and PAT at a rate of 49%. ROE and ROC are at 28.8% and 27.31% respectively.

What are the plans for the funds raised through the IPO of P N Gadgil Jewellers?

The funds raised through the IPO will be used for funding 12 new stores in Maharashtra and for repayment and prepayment of certain borrowings.